Zero point (TT Apr09 p22-23)

The diminishing returns on cash investments over recent months have become a serious issue for individuals and corporates alike, following a spate of cuts in base rate by the Bank of England’s monetary policy committee. The first reduction, from 5.75% to 5.5%, came in December 2007, but the pace accelerated last autumn and six cuts between October and last month took the rate from 5% to an unprecedented 0.5%. As a result, returns have fallen close to zero, putting the issue of interest rate management high on the corporate agenda.